Friday, February 5, 2021

These should be the top five priorities for those organizations seeking to promote balanced patent policy

Things haven't recently gone too well for those opposing patentee overcompensation in the information and communications technology sector and trollish litigation tactics. The German patent injunction reform effort is now at a point where even communists demand strong intellectual property protection. To turn that one around, with the end of the term approaching fast, is like trying to win a chess match after losing too many pieces. But there are five other contexts in which the camp that is making itself completely ridiculous in the German reform process could still bring about really positive developments. The following order does not indicate the relative importance of each item, but is related to how soon one would have to take action:

  1. Ericsson v. Samsung now involves multiple antisuit injunctions (Samsung obtained an A1SI and A3SI in China, and according to rumors the Chinese court even entered an A4SI for good measure, while Ericsson won an A2SI that is being appealed). Ericsson has announced significant amicus brief activity. This dispute could become the next Microsoft v. Motorola in terms of its importance for U.S. antisuit injunctions in standard-essential patent (SEP) cases. It won't be hard for Ericsson to find many allies who argue that U.S. courts should enjoin, enjoin, and enjoin--just to have as much patent litigation in the U.S. as possible. But that's not going to be constructive because other countries, such as China in this case, could take the same attitude.

    It's key to help decision-makers at all levels understand that AxSI injunctions are merely a symptomatic escalation ("bring the popcorn"), but the underlying problem is territorial overreach courtesy of the Supreme Court of the UK. Escalation doesn't solve the problem. Deference and restraint are needed. It may take an international treaty to ensure patents will be litigated jurisdiction by jurisdiction, including SEP valuation. I know some patent monetization-focused companies (trolls and others) don't like that, but it's the only way out of this mess. In the Ericsson-Samsung dispute you now have a Swedish company that wants to litigate in Texas and a Korean company that asked a Chinese court for a global FRAND determination. Plus, the Swedes say that they'd be open to arbitration, but that always favors patent holders making unreasonable demands (because its results gravitate toward the middle between the parties' positions, and while you can always go higher, you can't counterbalance an excessive royalty demand by offering a negative royalty).

    It would be desirable for some amici to support Samsung's opening brief (due later this month) and to explain to the Federal Circuit that what Ericsson seeks to accomplish isn't ultimately even going to be good for the U.S. economy.

  2. SEPs again: The Dusseldorf Regional Court's referral to the Court of Justice of the EU of certain component-level SEP licensing questions is certain to be affirmed by the regional appeals court. Nokia, Ericsson, Qualcomm, and other net patent licensors who prefer to shake down end-product makers are going to be lobbying all across the EU. The CJEU doesn't accept amicus briefs from companies or industry associations. You must get support for your positions from the European Commission and from the governments of EU member states. Daimler's IP lobbying capabilities are unproven to put it diplomatically for a change. More sophisticated organizations with an interest in component-level licensing should play an active role and talk to EU member state governments (to all of them) and figure out how to steer the Commission's position in the right direction.

  3. Another CJEU referral, but not SEP-related: the Munich I Regional Court made a smart move from its perspective by asking the top EU court to lower the standard for preliminary patent injunctions. But every referral creates an opportunity to achieve a different outcome than the one the referrer would like. I'm not suggesting that one could or should "hijack" this referral, but it is perfectly legitimate to raise the issue of proportionality (EU Intellectual Property Rights Enforcement Directive) in this context. Maybe this referral is not only the first but also, due to group pressure on German patent judges, the last opportunity for many years to challenge the German near-automatic patent injunction regime at the EU level. In terms of what it takes, see the previous item.

  4. Access to injunctions is also an issue on the other side of the Atlantic. The case law is good, but some politicians would like to overrule eBay v. MercExchange through new legislation. During the last term it turned out that Senator Thom Thillis (R-N.C.) was having second thoughts. Still, don't underestimate the risk here, and do your lobbying job on Capitol Hill before it's too late.

  5. Another Congressional challenge: the aforementioned Senator Thillis does still seek to do away with Alice (invalidity of abstract patents). He actually appears to be obsessed with that one--as is equally re-elected pro-patent-troll Senator Chris "Looney" Coons (D-Del.). This is going to be a bigger challenge than preserving the eBay standard!

The above handful of policy issues are likely the most important ones this year and next with respect to patents. Should the Federal Trade Commission file a cert petition in the Qualcomm case, that would make it six (precisely 50% of which would be SEP matters). The deadline is late next month, and I heard from DC circles that this depends on new nominations of FTC commissioners by President Biden. Even if that didn't work out, it's key to at least ensure that the Biden Administration's positions on SEP enforcement will be more like those of the Obama Administration.

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